London rental yields are among the lowest in the UK. While landlords in Manchester or Liverpool often see returns of 6-7%, the average gross yield in London sits around 4-5% in 2025.
That sounds bleak - but here’s the truth: most London landlords aren’t just being dragged down by market averages. They’re losing money through avoidable mistakes.
At Rocket Property Management, our landlords consistently achieve 9-10% net yields. Here’s why most investors underperform - and how you can change that.
The London Rental Yield Problem
- Average gross yield in London (2025): 4.2-4.5%
- Highest yields in outer boroughs: Barking (7.2%), Bow (6.5%), Thamesmead (6.4%)
- Prime central boroughs: Westminster and Kensington & Chelsea average just 2.5-4%
But these numbers only tell half the story. They reflect gross yield - before costs, voids, and management fees. In reality, many landlords see their net yield dip below 3% once those factors are included.
Where Landlords Are Losing Money
1. Below-Market Rent
Many agents fail to review rents regularly, leaving properties under-priced by £200-£400 per month or in some cases even more. That’s £2,400-£4,800 in lost income every year.
Rocket Case Study: One landlord in Clapham saw their rent increased by £300/month after a Rocket review - a £3,600 annual uplift.
2. Hidden Fees and Contractor Mark-Ups
Traditional high street agents often add 20% mark-ups on maintenance and repairs. A £5,000 works bill can quickly become £6,000 - eating directly into yield.
Rocket Difference: No contractor commissions. You pay what the contractor charges, nothing more.
3. Void Periods
An empty month can slash annual income by nearly 10%. Many agents fail to plan for peak vs low-demand seasons.
Rocket Strategy: Using short lets to cover voids, one landlord turned an expected empty Christmas into £2,000 profit.
4. Compliance Fines
From HMO rules to EPC upgrades, failing to comply can result in fines of up to £7,000 per offence.
Rocket Advantage: Proactive compliance management makes sure landlords stay ahead of regulation.
Case Studies: How Rocket Landlords Outperform
- Switching Agents: A landlord in Wimbledon switched to Rocket, cut costs, and saw an extra £5,000 income in year one.
- Portfolio Strategy: A 27-property portfolio inherited in London was underperforming. Rocket advised selling weak assets and reinvesting, producing a 20% uplift in net yield.
- Short Let Success: A landlord avoided void losses and generated an additional £2,000 income in a slow period with Rocket Stays.
FAQs
Is 7% a good rental yield?
In London, yes - 7% would be considered excellent, since most landlords achieve only 4–5%. Rocket landlords often see 9–10%.
Is 2% a good rental yield?
No. At 2%, your property is underperforming badly and likely losing money once costs are factored in.
Is 4.5% yield good?
It’s typical for London, but with the right strategy you should be aiming higher. Rocket’s rent reviews, fee transparency, and compliance management regularly push landlords into the 7–10% range.
How to Fix It
London yields may look poor on paper, but you don’t have to accept “average.”
The key is focusing on net yield, not gross - and that means:
- Regular rent reviews to stay at market level.
- Transparent management with no hidden fees.
- Smart use of short lets to cover voids.
- Proactive compliance to avoid fines.
Rocket’s Final Word
Most London landlords are stuck with yields of 3–5%, but it doesn’t have to be that way.
With the right management strategy, you can join the Rocket landlords achieving 9–10% returns.
Ready to see what your property could really earn?
Book your free rent review today.
